An 84-year-old Las Vegas man was arrested on fraud charges Thursday after federal authorities accused him of duping patients and investors with claims that he was a retired physician who had developed a novel medical procedure involving stem cells.
According to the indictment against Alfred T. Sapse, he used an unidentified Las Vegas pediatrician and a Mexican physician to perform experimental procedures on chronically ill patients. Under Sapse's direction, the indictment alleges, the doctors surgically implanted placental tissue in about 134 patients during the past four years.
"The nature of the defendant's activities is very harmful to the public," Assistant U.S. Attorney Daniel Schiess said during a court hearing Thursday.
According to the indictment, Sapse received about $1 million from patients and investors and used about $700,000 of that money "on personal expenditures and for gambling at local casinos."
A federal grand jury indicted the defendant Wednesday on seven counts of mail fraud and 13 counts of wire fraud. The indictment was sealed until his initial court appearance Thursday afternoon.
The nearly bald Sapse, wearing glasses with large, thick lenses, looked frail as he stood before U.S. Magistrate Judge Robert Johnston. Sapse pleaded not guilty to the charges and was released on his own recognizance.
According to the indictment, the defendant devised his scheme around January 2005.
"By misrepresenting his credentials, the nature of his treatment, the source of his 'stem cells,' and the adverse effects suffered by previous patients, defendant Sapse convinced chronically ill patients to undergo experimental implant procedures and convinced investors to pay him large amounts of money without knowing the short- or long-term effects of the implant procedure he was promoting," the indictment alleged.
The document alleged Sapse formed StemCell Pharma Inc., a Nevada corporation, in May 2005 "in order to create the false impression that he operated a legitimate pharmaceutical company."
According to the indictment, Sapse claims to be a retired foreign physician but has never been licensed in Nevada or any other state to practice medicine.
In January 2007, the Review-Journal reported that the federal Food and Drug Administration had told Sapse to stop implanting adult stem cells harvested from placentas into patients with various diseases, including multiple sclerosis.
The FDA had sent Sapse notice of its concerns in November 2006 after an inspection of StemCell Pharma Inc., which he operated in his Las Vegas apartment.
During that inspection, an FDA investigator discovered that Sapse was directing at least one physician to obtain human placentas from a local hospital, carry them to his office, process the tissue and implant them into at least 16 people. FDA officials did not identify the physician or the hospital.
The Review-Journal reported that the stem cells Sapse was using at his business were adult cells and not the controversial embryonic stem cells.
Adult stem cells are the immature cells that form the basis of human development and have the ability to generate specialized tissues and organs that make up the human body. Embryonic stem cells are those extracted from human fertilized eggs.
Adult stem cells have been used for decades to cure blood cancers such as leukemia and diseases like sickle cell anemia. Embryonic stem cells are considered to have potential for the treatment of diseases such as Alzheimer's, diabetes and Parkinson's.
According to the indictment, Sapse claimed he had pioneered a "proprietary technique" to extract stem cells from human placentas.
"He then caused the implantation of portions of the placental tissue into the abdomen of sick patients for the treatment of their diseases," the document alleged.
In court on Thursday, Schiess said Sapse arranged for doctors and nurses to obtain placentas and then had tissue from them surgically implanted in patients. When told to stop the practice in Nevada, the prosecutor said, Sapse moved part of his business to Mexico.
Around the fall of 2005, according to the indictment, Sapse hired a Las Vegas pediatrician with no prior stem cell training to perform his implant procedure on about 34 patients. The procedures took place between about February 2006 and November 2006.
The indictment alleged Sapse targeted "extremely sick patients," including those suffering from multiple sclerosis and cerebral palsy.
"Given the severity and irreversible nature of their diseases, patients with these diseases were particularly susceptible to defendant Sapse's claims that he could cure them or ameliorate their symptoms," according to the document.
The indictment alleged Sapse failed to obtain any approvals from the FDA, "as he knew he was required to do," before coordinating the procedures.
Sapse relocated his fraudulent scheme to Mexico around February 2007, according to the indictment, which alleged he entered into an arrangement with a physician in Nuevo Progresso, Mexico, to perform his implant procedure.
Under Sapse's direction, according to the indictment, the Mexican physician performed the procedure on about 100 patients between about February 2007 and May 2010.
During the court hearing Thursday, Schiess said authorities had interviewed a doctor who had performed procedures for Sapse. Schiess did not identify the doctor.
According to the indictment, Sapse falsely claimed that he had studied at the Filatov Institute of Eye Diseases and Tissue Therapy, a prestigious ophthalmological and tissue therapy clinic in Odessa, Ukraine, "where he purportedly learned about and performed placental implants."
"This was false, as defendant Sapse well knew, as he had never studied at, attended, or maintained any relationship with the Filatov Institute," the indictment alleged.
The indictment also alleged that Sapse failed to follow up with his patients after the procedures and "concealed from prospective patients and investors the adverse effects suffered by previous patients, including infection and worsening of their symptoms."
In court on Thursday, Sapse identified himself as a U.S. citizen but spoke with what sounded like a foreign accent. When asked about his education, he indicated either that he was a medical doctor or had a medical degree from the University of California, Los Angeles.
In releasing Sapse, Johnston ordered him to remain in Clark County and to take down his websites within the next 10 days. The judge barred Sapse from working in the medical field while awaiting trial. The defendant's trial has been scheduled for Sept. 20.
The website stemcellpharmainc.com identifies Sapse as an "M.D." It also identified Sapse as assistant professor in ophthalmology at University Eye Clinic in Geneva, Switzerland, and as "post doctoral and research assistant V" in the department of bacteriology at UCLA.
Sapse, who said he could not afford to hire an attorney, was represented in court by Assistant Federal Public Defender Richard Boulware. The defense lawyer declined to comment after the hearing.
In 1977, Sapse helped persuade Nevada lawmakers to legalize Gerovital, a drug that supporters touted as an anti-aging agent. Subsequent studies have not found Gerovital to have any therapeutic value.
The Review-Journal reported in 1997 that Dr. Alfred Sapse, identified at the time as a 74-year-old Las Vegas immunologist and researcher who was born in Romania, had developed a drug to fight AIDS. The drug, Anticort, recently had been approved by the FDA for human clinical trials.
In late 2005, Sapse tried to gather signatures on a petition aimed at persuading Nevada lawmakers to legalize his method of using stem-cell transplants to cure disease.
Sapse has been involved in several lawsuits over the years. He was arrested Thursday by special agents with the FDA's office of criminal investigations.
The Associated Press contributed to this report. Contact reporter Carri Geer Thevenot at email@example.com or 702-384-8710.